The Dow Jones industrial average lost 190 points, or 1.6%, to close at 11,906.

The Standard & Poor's 500 fell 21 points, or 1.7%, to 1,237. The Nasdaq composite index lost 47, or 1.7%, to 2,639.

Three stocks fell for every one that rose on the New York Stock Exchange. Volume was below average at 4 billion shares.

Meanwhile, data issued Wednesday point to an economy growing slowly but steadily.

Output at the nation's factories, utilities and mines rose 0.7% last month, the Federal Reserve said Wednesday. It was the fastest growth in three months. Factory output, the largest component of industrial production, increased a solid 0.5%. That marked the fourth straight monthly gain. Factories made more trucks, electronics and business equipment.

Only energy prices seemed to be taking note that the world's biggest economy was slowly staging a comeback. Benchmark oil shot up $2.50 to $101.87 in electronic trading on the New York Mercantile Exchange.

Still, surging oil prices and a possible European recession threaten to drain the economy's momentum.

Concerns lingered about Europe's debt crisis. Greece's new prime minister, Lucas Papademos, faces a confidence vote later Wednesday. His government must pass unpopular austerity measures to receive the next round of emergency loans.

The vote comes one day after reports that the European Union economy grew by just 0.2% between July and September, a sign that Europe may be headed for a recession. Together, the countries in the European Union are the world's largest economy and a key source of revenue for companies in the S&P's 500 index.

In corporate news, Abercrombie & Fitch (ANF) plunged after the company reported earnings that were well short of Wall Street's expectations. The company said rising costs for cotton and other commodities cut into profits.

Dell (DELL) dropped after the company said late Tuesday that its revenues will be held back by an industry-wide shortage of hard drives.

Investors ratcheted up the pressure on Europe on Wednesday, driving up the interest rates countries pay to borrow money and dumping stocks amid continuing unease over the continent's debt crisis.

Tuesday saw a run on both European stocks and bonds as investors questioned the viability of Italian Prime Minister-in-waiting Mario Monti. The respected economist was put in place to right Italy's economy and hopefully stop the spread of the crisis, which is already threatening Spain and even nipping at France.

A modest rally in the debt markets initially took hold Wednesday — with some speculating that the European Central Bank was buying up bonds to ease pressure after the previous day's carnage.

The central bank only confirms its interventions each Monday for the week previous, but it has often moved in to buy the bonds of wobbly countries to push down their yields — preventive medicine it hopes will head off the need for future bailouts.

But the relief didn't last long and by afternoon, the yield or interest rate on 10-year Italian bonds was back dangerously near 7% — the threshold that eventually forced Greece, Ireland and Portugal to seek bailouts. That's particularly worrying since Italy is considered too big to rescue.

Spain and France are also under pressure, with their yields rising to 6.35% and 3.63%, respectively.

Monti's announcement on Tuesday that he had secured broad support in Parliament initially provided some relief, but investors are unsure how long that will hold when his government imposes tough reforms. His cabinet was expected to be announced later Wednesday.

Monti and Greece's Papademos are struggling to hold together shifting political alliances in order to push through unpopular reforms.

After a couple of rough days, Europe was mostly down again Wednesday. That reflects analysts' concerns that the crisis is far from over, and that more ECB intervention is the only way out of it. The ECB is very reluctant to increase its involvement — refusing to be a lender of last resort for troubled countries, for instance — but many see no other solution.

Earlier in the day, Asian markets were also pessimistic about Europe's prospects.

Jane Foley of Rabobank, said:. "Political maneuvering takes time as does the implementation of budget reform. The ECB could be instrumental in buying some of this time."

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